A corporation has a bond issuance that pays 8% interest. You decide to buy 5 of these $1000 bonds when the market interest rate is 7%.1. Will you obtain the bonds at a premium or discount?2. What rate of interest will you earn over time?3. What amount of interest will you receive over time?4. What returns are you hoping for from this investment?5. Wouldn't a stock investment be better?

what does your textbook say? it may offer a clue.

1. You will pay a premium because the bond rate is greater than the market rate so the price will be bid up.2. Depends on whether you want yield to maturity or current yield. YTM is 7 percent; current yield is between 7 and 8 percent.3. You will receive $200 cash every six months.4. Hope has nothing to do with it. The return is determined by the price you paid and the interest the bond will pay. See question 2. 5. Depends on the investor's goals, risk aversion, and many other factors.